Companies incurring significant capital expenditure have received an unexpected boost, particularly given the loss of the super-deduction. For three years, from 1 April 2023, companies will be able to claim 100% capital allowances on qualifying plant and machinery expenditure with no limit on the amount of expenditure on which relief may be claimed. Assets qualifying for the special rate pool will attract a 50% first year allowance.
With effect from 1 April 2023, loss-making SME companies which undertake significant levels of R&D expenditure – more than 40% of their total expenditure – will be able to claim £27 for every £100 of their R&D costs, instead of £18.60 for loss making SMEs which incur a less significant level of R&D expenditure. Notwithstanding this, as a result of previously announced changes, all SMEs surrendering tax losses arising from R&D activities for payable credits will see the level of relief reducing from £33.35 per £100 of R&D costs with effect from 1 April 2023.
Companies granting share options under the Enterprise Management Incentives (EMI) scheme will benefit from April 2023 from simplifications to the process to grant options. This includes, from 6 April 2023, removing requirements to sign a working time declaration and setting out details of share restrictions in option agreements. This will potentially reduce compliance costs and may prevent EMI options from failing to qualify for relief due to administrative oversight. In addition, from 6 April 2024, the deadline for notifying an EMI option will be extended from 92 days following grant to 6 July following the end of the tax year.
Smaller growing companies may benefit as, with effect from 6 April 2023, the amounts which may be raised under the Seed Enterprise Investment Scheme will be increased to £250,000 and the annual limit for individual investment under this scheme raised to £200,000.
Small and independent brewers will benefit with the draught beer relief. These small brewers have suffered record levels of insolvency as production costs rise making them relatively uncompetitive to the big brewers who have increased off sales production (cans and bottles in supermarkets etc).
Landlords will be pleased that, contrary to speculation, the 3% Stamp Duty surcharge for purchases of ‘additional’ dwellings by individuals and purchases of dwellings by companies has not increased. It has recently increased to 6% in Scotland.
Reclaim farms (i.e., those who make unsolicited offers to recent house buyers to recover over-paid Stamp Duty on a no win/no fee basis) will also be rejoicing. Again, contrary to expectation, the Chancellor has not reformed the Stamp Duty rules on mixed-use and multiple dwelling transactions. The Government had proposed to change the rules to “make the system fairer and to reduce the scope for incorrect or abusive claims” subject to consultation. These changes are probably inevitable.
Despite some speculation, the proposed increase to the main rate of Corporation Tax to 25% will still go ahead from 1 April 2023. For most companies, this means that the rate at which they pay Corporation Tax on their profits will increase by over 30% with effect from 1 April 2023.
Given the prevalence of changes in tax rates and regime every year, and the possibility of a potential new Government on the horizon who may have very different policies, anyone looking at the UK as a place to do business may decide the uncertainty is too high and locate elsewhere.
Would you like to know more?
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You can also visit our Budget Hub, where you can find our commentary and a range of insights to help you better understand how the Budget may affect you.